In order for UK business to be successful it must be supported by a high quality national infrastructure. This has traditionally meant physical transport means and these are still of importance to many businesses today. But increasingly, it is the information infrastructure that is essential to a business’s operation. We can foresee a time in the very near future where many businesses can no more do without fast Internet access and remain competitive than they could do without the telephone.

The spread of broadband is the current issue at the top of the information infrastructure agenda and has been mentioned in the previous section. This is however only one in a succession of developments that have become a priority for business users. And even if we are able to achieve a comprehensive spread of internet access at the speeds currently defined as broadband, we can already anticipate the next wave of even faster technologies that will in turn become essential to business competitiveness.

It is in the nature of things that infrastructure investments increase in cost per capita in less densely populated areas. Most information infrastructure is no different in that more cables, exchanges, masts etc. are needed to reach people in sparsely populated areas. The notable exception to this is satellite which broadcasts across a footprint without the supplier needing additional equipment on the ground.

A purely market driven approach would therefore almost inevitably leave businesses away from the main urban centres at a considerable disadvantage. They would either face considerable delays in the infrastructure being available to them at all (as is happening with many of the broadband options at present) or they would have to pay a higher price to reflect the additional costs of delivering the service to them. Whilst domestic consumers may be able to live without a new service for some time, businesses in more remote areas may find it much harder to survive when they lack an essential facility that is available to their urban competitors.

Liberal Democrats do not want to see burdens placed on service providers that would render them unable to compete themselves as we wish to see a healthy competitive market. However, the prospect of leaving businesses in large areas of the country unable to compete in the modern economy is of sufficient public concern to merit appropriate government intervention.

One model for intervention that appears to be having some success is that which has been pioneered in Cornwall with strong Liberal Democrat support. The Cornish are using some of their regeneration funding to effectively make up the difference between the actual cost of connections in Cornwall and the cost of putting broadband into homes in more densely populated areas that BT would normally expect to incur. There have been other examples of public investment of this sort such as that which will bring better connectivity to the Highlands and Islands of Scotland.

Liberal Democrats believe that this is an effective model for intervention. Public funds can effectively be used to support infrastructure projects especially in the context of economic regeneration. As the IT infrastructure becomes increasingly important for the economic well-being of an area it is right to consider this to be a priority for public support.

Fiscal incentives also have an important role to play in encouraging the adoption of new technology. The specifics of the incentives on offer will necessarily change over time according to the evolving technological situation. We believe that it is right for Government to put in place incentives where these are likely to bring in a return in the form of increased productivity for UK businesses.

We are absolutely clear that we must not allow a digital divide to become a permanent feature of our society between those, mostly in urban areas, who have fast Internet access and those, mostly in rural areas, who do not. The measures we have described will go some way towards resolving access problems in some areas. Technological developments such as the rollout of new more powerful mobile telephone networks are also likely to help. However if in spite of this there remain areas of the country with no realistic prospect of receiving fast Internet via the market mechanism, then there is an overwhelming imperative for action by Government to intervene to ensure that there is broadband access for all

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